Estimate the price and income demand elasticities

Reference no: EM132207709

Question: The annual demand function for a particular motor car is estimated as:

D = 41,600 - (5P/3) + (Y2/10,000)

where D = annual demand, P = retail price in GBP and Y = average disposal income.

(i) Given that the retail price next year will be 36,000 GBP, whilst average disposable income is expected to be 28,000 GBP, estimate next year's annual demand. If the manufacturer receives 80% of the retail price for each car sold, estimate the manufacturer's revenue next year.

(ii) Find the retail price to maximise manufacturer's revenue next year

(iii) If the subsequent year the retail price is expected to rise to 38,500 GBP, whilst income should increase around 5%. Estimate demand and manufacturer's revenue for that year. And, use the information to estimate the price and income demand elasticities.

Reference no: EM132207709

Questions Cloud

How many acorns will lolita bring to the mall : Lolita is a learned and intelligent squirrel. She has decided to set up a stall at the rodent mall. At her stall, she sells the acorns that she collects.

What is your philosophy of academic coaching : What is your philosophy of academic coaching? Does it differ from your general philosophy of education?

The program user to enter grade for each ist class student : Write a program which ask the program user to enter grade for each IST class student.

The company plan to acquire to satisfy predicted demand : How many cells should the company plan to acquire to satisfy predicted demand under these conditions?

Estimate the price and income demand elasticities : If the subsequent year the retail price is expected to rise to 38,500 GBP, whilst income should increase around 5%. Estimate demand and manufacturer's revenue.

Store the updated prices in the second column of the array : Write the program so that it asks the user for a dollar amount by which each price should be increased.

Write a program that allows users to encrypt files : We will implement two simple encryption methods. Have the following GUI components: Have a button that when pressed opens a FileChooser.

What are the reserve-deposit ratio : In the nation of Dorne, the monetary base is $1,000,000. Suppose that the people of Dorne hold 1/4 of their money in the form of currency and 3/4 in bank.

Write a program that asks the user for an integer value : Write a program that asks the user for an integer value and that outputs the bit pattern for that integer, starting with the most significant bit.

User Account

All Pages